With enough automation it could become passive. Then again with enough automation everything becomes passive.

The problem is with cryptocoins, the window of opportunity is always small, short, and never comes again- you have to find an entirely new window.

Much like with most forms of arbitrage, and exploitable patterns in the stock market. You discovery the opportunity, you make a little $$, and the hole quickly closes as everyone else capitalizes on it too.

I don't think it would, actually. Enough people are willing to mine for a loss and the difficulty rises with availability of cheap hardware that it never becomes profitable. OP only made a (slight) profit because they could temporarily make renting a miner cheaper than the payout. This was temporary and now the market is back to status quo.

Maybe OP could automatically run his miners when such situations arrive, but I think it's unlikely to net anything like $17k/yr.

Edit: sliverstorm described this way better than I could.